US Navy Secretary John Phelan said the shipbuilding industry needs to up its wages if it’s going to attract and retain workers.
Phelan, like other Navy officials, experts, and leaders in the shipbuilding sector, has identified pay disparity as a major cause of US shipbuilding problems, as insufficient pay can make it harder to build up a skilled workforce for specialized jobs.
At a defense summit at Fort Wayne, Indiana, this week, the Navy’s top civilian official talked about US shipbuilding and naval readiness priorities, including strengthening manufacturing and critical industrial bases. Paying shipbuilders is a major concern that needs to be addressed, the service secretary said.
“I think this is really an issue of wages, to be honest, when I look at it across states,” Phelan said. He added that when workers can make the same money they might earn at a Buc-ee’s convenience store or at Amazon, but instead spend all day welding in tight spaces, “it’s hard to get that person to want to do that job.”
Amazon didn’t respond to Business Insider’s request for comment. A representative for Buc-ee’s said its employees are “well-compensated for their hard work and commitment” to help attract and retain top talent to serve its customers.
Buc-ee’s declined to share average salary details. Indeed, a popular job search and recruitment website, lists average hourly pay for general staff between $15 and $25. Amazon, according to wage data the company released in September, pays US fulfillment and transportation employees an average of over $23 an hour.
How closely those figures compare to shipyard wages is unclear — Business Insider reached out to several unions that declined to comment on wages, which can vary greatly across roles — but the Navy secretary’s remarks speak to a long-standing concern.
Naval affairs experts have long identified low wages within the shipbuilding industry as a critical issue for hiring and retaining more workers. Some have argued that the pay isn’t competitive enough for jobs that can be demanding, meaning potential workers opt for employment at other places.
Better quality of life and working conditions at shipyards, more automation and improved training, affordable housing nearby, and more benefits have also been identified as potential fixes.
The Navy secretary said that shipyard wages need to be adjusted to be competitive with other jobs to attract workers, as is the case with many other industries. Some progress has been made in some recent contracts, he said, but it needs to be a focus across yards and shipbuilding programs.
The issue isn’t just hiring but also keeping workers long-term to build up expertise. Per reports from the Government Accountability Office, a government watchdog agency, shipyards struggle to replace the loss of experienced, skilled workers.
Some shipbuilding companies, like top shipbuilder Huntington Ingalls Industries, have previously highlighted concerning decreases in the average years of experience among their workforces. That drop contributes to lower retention rates, more time spent training new hires, and an overall loss of expertise.
The post-Cold War era saw a hollowing out of the industry and a decrease in experience. Rebuilding that has become a priority, but key to getting there is higher wages, officials say.
Tackling these problems is central to reducing delays and cost overruns in the Navy’s biggest shipbuilding programs. HII has started to see results, CEO Chris Kastner said, after putting more money toward hiring experienced workers and recruiting more workers through regional training programs.
HII’s pursuit of this new approach has the company feeling “kind of cautiously optimistic,” Kastner said during a third-quarter earnings call last month, “and we hope to keep it going.”
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